TY  - JOUR
AU  - Krueger,Anne O.
TI  - Free Trade Agreements as Protectionist Devices: Rules of Origin
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 4352
PY  - 1993
Y2  - May 1993
UR  - http://www.nber.org/papers/w4352
L1  - http://www.nber.org/papers/w4352.pdf
N1  - Author contact info:
Anne O. Krueger
Department of International Economics
SAIS, Johns Hopkins University
1740 Massachusetts Avenue NW
Washington, DC 20036
Tel: 202/587-3238
E-Mail: annekrueger@jhu.edu
AB  - In this paper it is argued that there is an important protectionist bias inherent in free trade agreements which is not present in custom unions. In any customs union or free trade agreement, one of the critical issues concerns "rules of origin." In a free trade agreement rules of origin have an important function because, without one, each imported commodity would enter through the country with the lowest tariff on each commodity. The criterion for duty-free treatment is important in determining the economic effects of the rule of origin. It is shown that rules of origin in fact extend the protection accorded by each country to producers in other free trade agreement member countries. As such, rules of origin can constitute a source of bias toward economic inefficiency in free trade agreements in a way they cannot do with customs unions.
ER  -